PayPal to Throw Weight Behind NFC Technology for Digital Wallet

As Google is looking to tackling the mobile payment market with near-field communication (NFC) technology on Android starting with its own Nexus S smartphone, the company may be looking to partner with others to make the technology a reality that would aim to replace credit cards and your wallet with your smartphone as a payment method. PayPal itself is saying that it may enter the mobile payment market in the second half of 2011, perhaps partnering with Android to throw its weight behind NFC technology to give the digital mobile payment market some momentum.

Rather than swiping a credit card, Google is hoping that as smartphones become more popular–and most users always carry around a phone anyways–you can start to leave your wallet behind and wave your NFC-enabled Android phone in front of an NFC sensor or reader to pay for your transaction.

PayPal’s entry into the mobile payment market seems to be a natural fit for the company, which had built its name and reputation behind e-commerce as a a major payment source for EBay transactions.

Rather than using PayPal to pay just for digital goods–like on EBay, which also owns PayPal–the company is hoping that you’ll be able to use your mobile smartphone to pay for physical goods and conduct transactions. For instance, if you’re at a social dinner and need to split the restaurant bill and pay your friend back for your portion of the tab, you can–with NFC technology linked to your PayPal account–instantly transfer money by waving your phone next to your friend’s phone to transfer funds.

Google had also recently acquired Zetawire, presumably to push deeper into the digital mobile payment market.

Google’s Android competitors, such as Apple and Research in Motion, are also expected to dive into NFC payment too; both companies have already filed patents of their own for the payment-related technologies.